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HomeRight Arrow TerminologyRight Arrow Withholding Tax

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Withholding Tax

A withholding tax is a tax levied by a government on certain types of income at the source of payment. It is deducted or withheld by the payer of the income before the funds are passed on to the recipient. The withheld amount is then remitted to the government on behalf of the recipient. Withholding tax is commonly used to ensure that the government collects taxes on income generated within its jurisdiction, especially when the recipient of the income might be located in a different country.

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